Correlation Between Cable One and Kinder Morgan
Can any of the company-specific risk be diversified away by investing in both Cable One and Kinder Morgan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cable One and Kinder Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Kinder Morgan Kansas, you can compare the effects of market volatilities on Cable One and Kinder Morgan and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cable One with a short position of Kinder Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Kinder Morgan.
Diversification Opportunities for Cable One and Kinder Morgan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cable and Kinder is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Kinder Morgan Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan Kansas and Cable One is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cable One are associated (or correlated) with Kinder Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinder Morgan Kansas has no effect on the direction of Cable One i.e., Cable One and Kinder Morgan go up and down completely randomly.
Pair Corralation between Cable One and Kinder Morgan
Assuming the 90 days trading horizon Cable One is expected to under-perform the Kinder Morgan. But the stock apears to be less risky and, when comparing its historical volatility, Cable One is 1.04 times less risky than Kinder Morgan. The stock trades about -0.03 of its potential returns per unit of risk. The Kinder Morgan Kansas is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,978 in Kinder Morgan Kansas on August 26, 2024 and sell it today you would earn a total of 7,070 from holding Kinder Morgan Kansas or generate 78.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.89% |
| Values | Daily Returns |
Cable One vs. Kinder Morgan Kansas
Performance |
| Timeline |
| Cable One |
| Kinder Morgan Kansas |
Cable One and Kinder Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Kinder Morgan
The main advantage of trading using opposite Cable One and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, Kinder Morgan can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kinder Morgan will offset losses from the drop in Kinder Morgan's long position.| Cable One vs. T Mobile | Cable One vs. Verizon Communications | Cable One vs. ATT Inc | Cable One vs. Telefnica SA |
| Kinder Morgan vs. ONEOK Inc | Kinder Morgan vs. BTG Pactual Logstica | Kinder Morgan vs. Plano Plano Desenvolvimento | Kinder Morgan vs. Cable One |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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